European Equities: A Quiet Economic Calendar to Leave Market Focus on the FED

Upbeat business sentiment figures from Germany provided support early in the European session. Following a late U.S market rebound on Monday, dip buyers provided support ahead of Wednesday’s FED policy decision.

With uncertainty over what lies ahead on the policy front, however, and with the U.S equity markets in the red, the gains were modest.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. German business sentiment figures were on focus early in the European session.

In January, Germany’s Ifo Business Climate Index climbed from 94.8 to 95.7 Economists had forecast a decline to 94.7. The Business Expectations Index rose from 92.7 to 95.2, while the Current Assessment Index slipped from 96.9 to 96.1.

According to the January survey,

• In manufacturing, the index saw a sharp increase. Companies were both more satisfied with the current business and also more optimistic about the months ahead.
• Service sector firms also saw a pickup in business sentiment. While firms were no longer pessimistic, service providers were less satisfied with their current situation.
• In trade, the business climate also improved. Expectations improved noticeably, while sentiment towards the current situation worsened.

From the U.S

Consumer confidence waned in January. The CB Consumer Confidence Index slipped from 115.2 to 113.8. Economists had forecast a decline to 111.8.

According to the January survey,

• The Present Situation Index rose from 144.8 to 148.2, while the Expectations Index slipped from 95.4 to 90.8.
• While the Expectations Index was weaker, the proportion of consumers planning to purchase homes, automobiles, and major appliances over the next 6-months were on the rise.
• Concerns about inflation declined for a 2^nd consecutive month, while remaining elevated.
• By contrast, concerns about the pandemic increased as a result of the Omicron breakout.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Volkswagen rose by 0.99%, with Daimler gaining 0.79%. BMW and Continental ended the day up by 0.66% and by 0.64% respectively.

It was also a bullish day for the banks. Deutsche Bank rose by 2.92%, with Commerzbank rallying by 4.27%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen rallied by 3.26% and by 2.97% respectively, with Credit Agricole gaining 1.65%.

The French auto sector had a mixed session. Stellantis NV fell by 0.83%, while Renault ended the day up by 3.15%.

Air France-KLM and Airbus SE saw modest gains of 0.21% and 0.93% respectively.

On the VIX Index

It was a 6^th consecutive day in the green for the VIX on Tuesday.

Following a 3.64% rise on Monday, the VIX increased by 4.21% to end the day at 31.16.

The Dow slipped by 0.19%, with the NASDAQ and the S&P500 seeing losses of 2.28% and 1.22% respectively.

The Day Ahead

It’s a quiet day ahead on the Eurozone’s economic calendar. Economic data is limited to French jobseeker numbers that will have a muted impact on the European majors.

With the FED monetary policy decision and press conference scheduled for after the European close we can expect some market caution through the session.

From the U.S, stats include housing sector and goods trade data. We don’t expect the numbers to influence, however. The U.S futures will likely provide direction ahead of the U.S open.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 94 points.

For a look at all of today’s economic events, check out our economic calendar.